These lecture notes look at the essentials within the topic of aggregate supply within macroeconomics. These notes look at the key definition before going into depth about aggregate in the short and long run. These notes are written consicely and in depth to aid understanding.
Aggregate Supply
1. Aggregate supply is the total amount of goods and services that
producers are willing and able to supply to the market at a given price
level, over a period.
2. The Relationship between Price and Quantity Supplied: The aggregate
supply curve shows the relationship between the price level and the
quantity of output that producers are willing and able to supply. The
curve slopes upward, indicating that producers are willing to supply
more output at higher price levels.
3. Factors that Influence Aggregate Supply: There are several factors that
can influence aggregate supply:
Changes in production costs: Increases in production costs, such as
wages, raw materials, or energy, can reduce the quantity of output that
producers are willing to supply at a given price level.
Changes in technology: Advances in technology can increase productivity
and reduce production costs, increasing the quantity of output that
producers are willing to supply at a given price level.
Changes in taxes and regulations: Increases in taxes or regulatory
burdens can increase production costs, reducing the quantity of output
that producers are willing to supply at a given price level.
Changes in the availability of resources: Changes in the availability of
natural resources or other inputs can affect the cost of production and
the quantity of output that producers are willing to supply.
4. Shifts in Aggregate Supply: A shift in aggregate supply refers to a change
in the total amount of output that producers are willing and able to
supply at every price level. Shifts can be caused by changes in any of the
factors that influence aggregate supply, as well as by external shocks
such as natural disasters or political instability.
5. Short-Run Aggregate Supply (SRAS) vs. Long-Run Aggregate Supply
(LRAS): The short-run aggregate supply curve shows the relationship
between the price level and the quantity of output that producers are
willing and able to supply in the short run when some input prices are
fixed. The long-run aggregate supply curve shows the relationship
between the price level and the quantity of output that producers are
willing and able to supply in the long run, when all input prices are
flexible.
6. Aggregate Supply and Economic Growth: In the long run, the level of
aggregate supply is determined by factors such as productivity,
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